The US $173 iPhone 3G cost estimate from iSuppli – that’s cheap!

by Alex Zaharov-Reutt

Wednesday, 25 June 2008

Page 2 of 3 This is possible because AT&T is subsidising the cost of the iPhone. It’s reportedly paying Apple at least US $300 per iPhone, because it has a two year billing relationship with you, the consumer, and so can afford to pay Apple the extra amount as a way to ensure you’ll buy an iPhone from AT&T and not a different brand of phone from another telco. But having a low bill of materials cost helps Apple to compete against other phone manufacturers out there. As an example, the HTC Touch Diamond will cost AUD $999 to purchase in Australia, and you still need to go on some kind of plan. PC World says the HTC Touch Diamond will cost US $785 and the Nokia N96, which is not yet available, will cost around US $855. So, why is Apple getting such a good deal on components to build the iPhone? And why are phones like the HTC Touch Diamond and N96 so expensive in comparison? The usual reason why Apple can get such a good deal is because of volume. Its products are enormously successful, and so Apple can make large orders and secure better pricing because of that. Apple’s success with the iPod range means it buys a lot of storage, so it gets ever better pricing. And the companies it buys from have large orders which mean manufacturers can get better pricing for the raw materials they have to buy to fulfil Apple’s orders. Yes, if prices for commodities are going up, low prices can’t be guaranteed forever. But we still live in a world where electronics are cheaper than ever, and Apple is taking advantage of this trend. We could easily see a more expensive iPhone in the future if prices for commodities, energy and transport continue rising. It’s a problem already affecting the price of food and energy. And it’s not only Apple that will face this issue, but all manufacturers. So why then are Nokia and HTC’s phones listed at such high prices? Continued on page 3. << First page <   1 2 3 Next page > Last page - Post your comment >>

 

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